QS Research · Michael Burry's Scion Capital analyst template · 2006
Strategy Inc (MSTR)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -25% · upside +26%
Base case: TTM to Sep 30, 2026 revenue is $495.1M, EBIT is -$19.34B, net income to common is -$14.89B and free cash flow is -$11.1M, so the operating business earns no multiple; at the sourced 1.00x P/B the $55.44B equity is about $129.5 per share, essentially today's $128.93 (N8, N10, N13, N16, N20, N23, N1, N5). Downside marks book down 25% at the same 1.00x P/B to about $97 (-25%), and upside marks book up 25% to about $162 (+26%); the base is not +30% and the upside is not <= +25%, so neither long nor short rule is met. The market is not missing the bitcoin treasury at P/B 1.00x, but it is paying 111.47x TTM sales for a software business whose revenue has gone nowhere since FY2020 and whose operating cash flow is negative. Dated catalysts such as STRC daily dividends from 2026-11-01, the unused $1B MSTR buyback and the $10-30B digital-credit plan could create a mispricing, but not enough to act today: watch.
Key numbers
- Share price: $128.93
- Market cap: $55.19B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $495.1M
- Price / book: 1.00x
The 15 boxes
- ✓ 1. Long-form business notes
Strategy makes money from enterprise analytics software and uses capital markets to accumulate bitcoin; by FY2025 its balance sheet and share count are dominated by that treasury strategy. FY2025 revenue was $477.2M with gross profit of $327.8M, but operating income was -$5.44B and net income to common was -$4.23B, while operating cash flow was -$67.2M. As of February 13, 2026 it held about 717,131 bitcoin and a $2.25B USD Reserve; the FY2020 10-K described a much smaller software-led company with bitcoin as a newer second strategy.
- ✓ 2. Competitive advantage
No durable competitive advantage is visible in the numbers: revenue went nowhere from FY2020 ($480.7M) to FY2025 ($477.2M) while gross profit fell from $389.7M to $327.8M, operating income was negative in every one of the six years, and operating cash flow turned negative in FY2024-FY2025. The 10-K itself calls the AI/analytics market 'highly competitive' and names IBM, Microsoft, Oracle, Salesforce and SAP as competitors, with success resting on product quality and AI features rather than any lock-in the filings quantify. What the company does claim as scale is elsewhere: it calls itself the world's first and largest Bitcoin Treasury Company, holding 717,131 bitcoin at a $76,027 average cost against a $68,734 market price on 2026-02-13, funded by five new preferred classes and heavy common share issuance (9.68M diluted shares FY2020 to 277.66M FY2025).
- ✓ 3. 10-Q takeaways
Q3 2026 (three months ended September 30, 2026) software revenue was $125.4 million, down 3% year over year, with $89.6 million gross profit and a 71% gross margin. The reported $20.91 billion of operating income, $19.53 billion of net income and $44.75 diluted EPS are the $20.91 billion mark-to-market gain on digital assets, not software operations; the nine months to September 30, 2026 still carry a net $1.86 billion loss on digital assets. Cash was $2.50 billion plus $3.40 billion of short-term investments at September 30, 2026, and $5.07 billion of USD Assets are said to cover roughly 3.4 years of preferred dividends and interest. Q3 2026 raised $5.41 billion of class A equity but sent only $588.1 million to bitcoin, lifting assumed diluted shares to 451.6 million and producing BTC Yield of (11.9)%, while STRC repurchases continued.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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